REG - 3M Company - 3rd Quarter Results <Origin Href="QuoteRef">MMM.N</Origin> - Part 8
03/11/2014 08:05
- Part 8: For the preceding part double click ID:nRSC9102Vg
additional $219 million in stand-alone letters of credit and $22 million in bank guarantees were
also issued and outstanding at September 30, 2014. These lines of credit are utilized in connection with normal business
activities. Under the $2.25 billion credit agreement, the Company is required to maintain its EBITDA to Interest Ratio as
of the end of each fiscal quarter at not less than 3.0 to 1. This is calculated (as defined in the agreement) as the ratio
of consolidated total EBITDA for the four consecutive quarters then ended to total interest expense on all funded debt for
the same period. At September 30, 2014, this ratio was approximately 59 to 1. Debt covenants do not restrict the payment of
dividends.
The Company has a "well-known seasoned issuer" shelf registration statement, effective May 16, 2014, which registers an
indeterminate amount of debt or equity securities for future sales. This replaced 3M's previous shelf registration dated
August 5, 2011. In June 2014, in connection with the May 16, 2014 shelf registration, 3M re-commenced its medium-term notes
program (Series F) under which 3M may issue, from time to time, up to $9 billion aggregate principal amount of notes.
Included in this $9 billion are $2.25 billion of notes previously issued in 2011 and 2012 as part of Series F. In June
2014, 3M issued $625 million aggregate principal amount of five-year fixed rate medium-term notes due 2019 with a coupon
rate of 1.625%. Upon debt issuance, $600 million of this amount was converted to an interest rate based on a floating LIBOR
index. In addition, in June 2014, 3M issued $325 million aggregate principal amount of thirty-year fixed rate medium-term
notes due 2044 with a coupon rate of 3.875%. Both June 2014 debt issuances were from the medium-term notes program (Series
F).
In September 2011, in connection with the August 5, 2011 shelf registration statement, 3M established a $3 billion
medium-term notes program (Series F), from which 3M issued a five-year $1.0 billion fixed rate note with a coupon rate of
1.375%. Proceeds were used for general corporate purposes, including repayment in November 2011 of $800 million (principal
amount) of medium-term notes. In June 2012, 3M issued $650 million aggregate principal amount of five-year fixed rate
medium-term notes due 2017 with a coupon rate of 1.000% and $600 million aggregate principal amount of ten-year fixed rate
medium-term notes due 2022 with a coupon rate of 2.000%, which were both issued from this $3 billion medium-term notes
program (Series F).
Sources for cash availability in the United States, such as ongoing cash flow from operations and 3M's proven access to
capital markets, have historically been sufficient to fund dividend payments to shareholders and share repurchases, in
addition to funding U.S. acquisitions, U.S. capital spending, U.S. pension/other postemployment benefit contributions, and
other items as needed. For those international earnings considered to be reinvested indefinitely, the Company currently has
no plans or intentions to repatriate these funds for U.S. operations. However, if these international funds are needed for
operations in the U.S., 3M would be required to accrue and pay U.S. taxes to repatriate them.
In 2014, the Company plans to contribute approximately $200 million of cash to its pension and postretirement plans. The
Company does not have a required minimum cash pension contribution obligation for its U.S. plans in 2014. Therefore, the
amount of the anticipated discretionary contribution could vary significantly depending on the U.S. qualified plans' funded
status as of the 2014 measurement date and the anticipated tax deductibility of the contribution. Future contributions will
also depend on market conditions, interest rates and other factors. 3M believes its strong cash flow and balance sheet will
allow it to fund future pension needs without compromising growth opportunities.
3M's strong balance sheet and liquidity provide the Company with significant flexibility to take advantage of numerous
opportunities going forward. The Company will continue to invest in its operations to drive growth, including continual
review of acquisition opportunities. In December 2013, 3M's Board of Directors declared a dividend of 85.5 cents per share
for the first-quarter of 2014, an increase of 35 percent. This is equivalent to an annual dividend of $3.42 per share and
marked the 56th consecutive year of dividend increases for 3M. In February 2014, 3M's Board of Directors also authorized
the repurchase of up to $12 billion of 3M's outstanding common stock, which replaced the Company's February 2013 repurchase
program. This authorization has no pre-established end date. As of September 30, 2014, approximately $7.9 billion remained
available under the February 2014 repurchase authorization.
Various assets and liabilities, including cash and short-term debt, can fluctuate significantly from month to month
depending on short-term liquidity needs. Working capital (defined as current assets minus current liabilities) totaled
$4.976 billion at September 30, 2014, compared with $5.235 billion at December 31, 2013, a decrease of $259 million.
Current asset balance changes decreased working capital by $52 million, with increases in accounts receivable and other
items offset by a decrease in cash and cash equivalents. Current liability balance changes decreased working capital by
$207 million, largely due to an increase in short-term debt partially offset by decreases in other current liabilities. The
other current liabilities decrease largely related to the dividend declared in December 2013 that was not paid until March
2014 (discussed in Note 4).
The Company uses various working capital measures that place emphasis and focus on certain working capital assets and
liabilities. These measures are not defined under U.S. generally accepted accounting principles and may not be computed the
same as similarly titled measures used by other companies. One of the primary working capital measures 3M uses is a
combined index, which includes accounts receivable, inventories and accounts payable. This combined index (defined as
quarterly net sales - fourth quarter at year-end - multiplied by four, divided by ending net accounts receivable plus
inventories less accounts payable) was 4.7 at September 30, 2014 compared to 4.8 at December 31, 2013. Receivables
increased $458 million, or 10.8 percent, compared with December 31, 2013, with higher September 2014 sales compared to
December 2013 sales contributing to this increase. Currency translation impacts decreased accounts receivable by $138
million. Inventories increased $81 million, or 2.1 percent, compared with December 31, 2013, with the increases primarily
attributable to an increase in demand in the first nine months of 2014, partially offset by currency translation, which
decreased inventories by $151 million. Accounts payable had a minimal change when compared with December 31, 2013.
Cash flows from operating, investing and financing activities are provided in the tables that follow. Individual amounts in
the Consolidated Statement of Cash Flows exclude the effects of acquisitions, divestitures and exchange rate impacts on
cash and cash equivalents, which are presented separately in the cash flows. Thus, the amounts presented in the following
operating, investing and financing activities tables reflect changes in balances from period to period adjusted for these
effects.
Cash Flows from Operating Activities:
Nine months ended
September 30,
(Millions) 2014 2013
Net income including noncontrolling interest $ 3,819 $ 3,605
Depreciation and amortization 1,058 1,014
Company pension contributions (107) (381)
Company postretirement contributions (5) (4)
Company pension expense 232 332
Company postretirement expense 61 82
Stock-based compensation expense 221 197
Income taxes (deferred and accrued income taxes) (25) (29)
Excess tax benefits from stock-based compensation (121) (68)
Accounts receivable (587) (643)
Inventories (232) (155)
Accounts payable 55 (26)
Product and other insurance receivables and claims 50 37
Other - net 24 (137)
Net cash provided by operating activities $ 4,443 $ 3,824
Cash flows from operating activities can fluctuate significantly from period to period, as pension funding decisions, tax
timing differences and other items can significantly impact cash flows.
In the first nine months of 2014, cash flows provided by operating activities increased $619 million compared to the same
period last year, driven by lower pension contributions and increases in net income including noncontrolling interest. The
combination of accounts receivable, inventories and accounts payable increased working capital by $764 million in the first
nine months of 2014, compared to increases of $824 million in the first nine months of 2013, consistent with prior
year-on-year increases in working capital requirements due to increasing sales. Additional discussion on working capital
changes is provided earlier in the "Financial Condition and Liquidity" section.
Free Cash Flow (non-GAAP measure):
In addition to net cash provided by operating activities, 3M uses free cash flow as a useful measure of performance and as
an indication of the strength of the Company and its ability to generate cash. 3M defines free cash flow as net cash
provided by operating activities less purchases of property, plant and equipment (which is classified as an investing
activity). Free cash flow is not defined under U.S. generally accepted accounting principles (GAAP). Therefore, it should
not be considered a substitute for income or cash flow data prepared in accordance with U.S. GAAP and may not be comparable
to similarly titled measures used by other companies. It should not be inferred that the entire free cash flow amount is
available for discretionary expenditures. Below find a recap of free cash flow for the nine months ended September 30, 2014
and 2013.
Nine months ended
September 30,
(Millions) 2014 2013
Net cash provided by operating activities $ 4,443 $ 3,824
Purchases of property, plant and equipment (PP&E) (1,003) (1,122)
Free Cash Flow $ 3,440 $ 2,702
Cash Flows from Investing Activities:
Nine months ended
September 30,
(Millions) 2014 2013
Purchases of property, plant and equipment (PP&E) $ (1,003) $ (1,122)
Proceeds from sale of PP&E and other assets 116 86
Acquisitions, net of cash acquired (94) -
Purchases and proceeds from sale or maturities of marketable securities and investments, net 383 313
Other investing 20 21
Net cash used in investing activities $ (578) $ (702)
Investments in property, plant and equipment enable growth across many diverse markets, helping to meet product demand and
increasing manufacturing efficiency. Capital spending was $1.003 billion in the first nine months of 2014, compared to
$1.122 billion in the first nine months of 2013. The Company expects 2014 capital spending to be approximately $1.5 billion
to $1.6 billion, as 3M continues to invest to expand its businesses. In 2013, 3M continued its expansion of manufacturing
capacity in key markets, including investments in the U.S., China, Germany, and Brazil. This included significant
investments across 3M's many businesses, such as abrasives, industrial adhesives and tapes, advanced materials,
electronics-related, infection prevention, and other businesses. 3M continued its investments in IT systems and
infrastructure, including ongoing phased implementation of an ERP system on a worldwide basis over the next several years.
In addition, 3M is sustaining existing facilities through general maintenance, cost reduction, and compliance efforts.
3M is striving to increase its manufacturing and sourcing capacity, particularly in developing economies, in order to more
closely align its production capability with its sales in major geographic regions. The initiative is expected to help
improve customer service, lower transportation costs, and reduce working capital requirements. 3M will continue to make
investments in critical emerging markets, such as China, Brazil, Poland and India, including plans to establish and begin
production in a new wholly-owned manufacturing entity in India to serve as a source of supply to 3M's business in India and
in other countries.
Proceeds from sale of PP&E and other assets totaled $116 million in the first nine months of 2014 compared to $86 million
in the same period last year. Apart from the normal periodic sales of PP&E, the first nine months of 2014 included proceeds
of $50 million related to the sale of real estate.
Refer to Note 2 for information on acquisitions and divestitures. The Company is actively considering additional
acquisitions, investments and strategic alliances, and from time to time may also divest certain businesses.
Purchases of marketable securities and investments and proceeds from maturities and sale of marketable securities and
investments are primarily attributable to asset-backed securities, agency securities, corporate medium-term note securities
and other securities, which are classified as available-for-sale. Interest rate risk and credit risk related to the
underlying collateral may impact the value of investments in asset-backed securities, while factors such as general
conditions in the overall credit market and the nature of the underlying collateral may affect the liquidity of investments
in asset-backed securities. The coupon interest rates for asset-backed securities are either fixed rate or floating.
Floating rate coupons reset monthly or quarterly based upon the corresponding monthly or quarterly LIBOR rate. Each
individual floating rate security has a coupon based upon the respective LIBOR rate +/- an amount reflective of the credit
risk of the issuer and the underlying collateral on the original issue date. Terms of the reset are unique to individual
securities. Fixed rate coupons are established at the time the security is issued and are based upon a spread to a related
maturity treasury bond. The spread against the treasury bond is reflective of the credit risk of the issuer and the
underlying collateral on the original issue date. 3M does not currently expect risk related to its holdings in asset-backed
securities to materially impact its financial condition or liquidity. Refer to Note 6 for more details about 3M's
diversified marketable securities portfolio, which totaled $1.872 billion as of September 30, 2014. Purchases of
investments include additional survivor benefit insurance, plus cost method and equity investments.
Cash Flows from Financing Activities:
Nine months ended
September 30,
(Millions) 2014 2013
Change in short-term debt - net $ 1,935 $ 607
Repayment of debt (maturities greater than 90 days) (1,551) (853)
Proceeds from debt (maturities greater than 90 days) 1,064 12
Total cash change in debt $ 1,448 $ (234)
Purchases of treasury stock (4,373) (3,538)
Proceeds from issuances of treasury stock pursuant to stock option and benefit plans 739 1,372
Dividends paid to stockholders (1,672) (1,307)
Excess tax benefits from stock-based compensation 121 68
Purchase of noncontrolling interest (699) -
Other - net (37) (4)
Net cash used in financing activities $ (4,473) $ (3,643)
Total debt at September 30, 2014 was $7.3 billion, up from $6.0 billion at year-end 2013. Total debt was 31 percent of
total capital (total capital is defined as debt plus equity) at September 30, 2014, compared to 25 percent of total capital
at year-end 2013. Changes in short-term debt for the nine months ended September 30, 2014 largely related to commercial
paper issuances ($1.9 billion), but also included bank borrowings by international subsidiaries. Repayment of debt for the
nine months ended September 30, 2014 primarily includes repayment of a Eurobond repaid in July 2014 totaling 1.025 billion
Euros (approximately $1.4 billion carrying value), repayment of 36 million British Pound related to the three-year 66
million British Pound committed credit facility agreement entered into in December 2012, and repayment of other
international debt. Proceeds from debt for the nine months ended September 30, 2014 primarily related to the June 2014
issuance of $625 million aggregate principal amount of five-year fixed rate medium-term notes due 2019 and $325 million
aggregate principal amount of thirty-year fixed rate medium-term notes due 2044 (refer to Note 7 for more detail). In
addition, proceeds from debt for the nine months ended September 30, 2014 also include bank borrowings by international
subsidiaries and parent company debt. For the first nine months of 2013, changes in short-term debt primarily related to
commercial paper activity. Repayment of debt in the first nine months of 2013 related to the August 2013 repayment of $850
million (principal amount) of medium-term notes.
Repurchases of common stock are made to support the Company's stock-based employee compensation plans and for other
corporate purposes. In February 2014, 3M's Board of Directors authorized the repurchase of up to $12 billion of 3M's
outstanding common stock, which replaced the Company's February 2013 repurchase program. This authorization has no
pre-established end date. In the first nine months of 2014, the Company purchased $4.373 billion of stock, compared to
$3.538 billion in the first nine months of 2013. The Company expects full-year 2014 gross share repurchases will be in the
range of $5.5 to $6.0 billion, compared to a previous range of $4.5 billion to $5.0 billion. For more information, refer to
the table titled "Issuer Purchases of Equity Securities" in Part II, Item 5. The Company does not utilize derivative
instruments linked to the Company's stock.
Cash dividends paid to shareholders totaled $1.672 billion in the first nine months of 2014, compared to $1.307 billion in
the first nine months of 2013. 3M has paid dividends each year since 1916. In December 2013, 3M's Board of Directors
declared a first-quarter 2014 dividend of $0.855 per share, an increase of 35 percent. This is equivalent to an annual
dividend of $3.42 per share and marked the 56th consecutive year of dividend increases.
In addition to the items described below, other cash flows from financing activities may include various other items, such
as distributions to or sales of noncontrolling interests, changes in cash overdraft balances, and principal payments for
capital leases.
On September 1, 2014, 3M purchased (via Sumitomo 3M Limited) Sumitomo Electric Industries, Ltd.'s 25 percent interest in
3M's consolidated Sumitomo 3M Limited subsidiary for 90 billion Japanese Yen, or approximately $865 million at closing date
exchange rates. Upon completion of this transaction, 3M owned 100 percent of Sumitomo 3M Limited. Approximately $694
million was reflected as a financing activity in the consolidated statement of cash flows while the remainder was recorded
as a current liability (paid in October 2014).
In April 2014, 3M purchased the remaining noncontrolling interest in a consolidated 3M subsidiary for an immaterial amount,
which was classified as a financing activity in the consolidated statement of cash flows.
In March 2013, 3M sold shares in 3M India Limited, a subsidiary of the Company, in return for $8 million. The
noncontrolling interest shares of this subsidiary trade on a public exchange in India. This sale of shares complied with an
amendment to Indian securities regulations that required 3M India Limited, as a listed company, to achieve a minimum public
shareholding of at least 25 percent. As a result of this transaction, 3M's ownership in 3M India Limited was reduced from
76 percent to 75 percent. The $8 million received in the first quarter of 2013 was classified as other financing activity
in the consolidated statement of cash flows.
CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS
This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Part I, Item 2, contains forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. The Company may also make forward-looking statements in other reports filed with the Securities and
Exchange Commission, in materials delivered to shareholders and in press releases. In addition, the Company's
representatives may from time to time make oral forward-looking statements.
Forward-looking statements relate to future events and typically address the Company's expected future business and
financial performance. Words such as "plan," "expect," "aim," "believe," "project," "target," "anticipate," "intend,"
"estimate," "will," "should," "could" and other words and terms of similar meaning, typically identify such forward-looking
statements. In particular, these include, among others, statements relating to
· the Company's strategy for growth, future revenues, earnings, cash flow, uses of cash and other measures of
financial performance, and market position,
· worldwide economic and capital markets conditions, such as interest rates, foreign currency exchange rates,
financial conditions of our suppliers and customers, and natural and other disasters affecting the operations of the
Company or our suppliers and customers,
· new business opportunities, product development, and future performance or results of current or anticipated
products,
· the scope, nature or impact of acquisition, strategic alliance and divestiture activities,
· the outcome of contingencies, such as legal and regulatory proceedings,
· future levels of indebtedness, common stock repurchases and capital spending,
· future availability of and access to credit markets,
· pension and postretirement obligation assumptions and future contributions, asset impairments, tax liabilities,
information technology security, and
· the effects of changes in tax, environmental and other laws and regulations in the United States and other
countries in which we operate.
The Company assumes no obligation to update or revise any forward-looking statements.
Forward-looking statements are based on certain assumptions and expectations of future events and trends that are subject
to risks and uncertainties. Actual future results and trends may differ materially from historical results or those
reflected in any such forward-looking statements depending on a variety of factors. Important information as to these
factors can be found in this document, including, among others, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" under the headings of "Overview," "Financial Condition and Liquidity" and annually in
"Critical Accounting Estimates." Discussion of these factors is incorporated by reference from Part II, Item 1A, "Risk
Factors," of this document, and should be considered an integral part of Part I, Item 2, "Management's Discussion and
Analysis of Financial Condition and Results of Operations." For additional information concerning factors that may cause
actual results to vary materially from those stated in the forward-looking statements, see our reports on Form 10-K, 10-Q
and 8-K filed with the SEC from time to time.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
In the context of Item 3, 3M is exposed to market risk due to the risk of loss arising from adverse changes in foreign
currency exchange rates, interest rates and commodity prices. Changes in those factors could cause fluctuations in earnings
and cash flows. For a discussion of sensitivity analysis related to these types of market risks, refer to Part II, Item 7A,
Quantitative and Qualitative Disclosures About Market Risk, in 3M's Current Report on Form 8-K dated May 15, 2014 (which
updated 3M's 2013 Annual Report on Form 10-K). There have been no material changes in information that would have been
provided in the context of Item 3 from the end of the preceding year until September 30, 2014. However, the Company does
provide risk management discussion in various places in this Quarterly Report on Form 10-Q, primarily in the Derivatives
note.
Item 4. Controls and Procedures.
a. The Company carried out an evaluation, under the supervision and with the participation of its management, including the
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's
"disclosure controls and procedures" (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by
this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective.
b. There was no change in the Company's internal control over financial reporting that occurred during the Company's most
recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
The Company is implementing an enterprise resource planning ("ERP") system on a worldwide basis, which is expected to
improve the efficiency of certain financial and related transaction processes. The gradual implementation is expected to
occur in phases over the next several years. The implementation of a worldwide ERP system will likely affect the processes
that constitute our internal control over financial reporting and will require testing for effectiveness.
The Company completed implementation with respect to elements of certain processes/sub-processes in limited
subsidiaries/locations and will continue to roll-out the ERP system over the next several years. As with any new
information technology application we implement, this application, along with the internal controls over financial
reporting included in this process, was appropriately considered within the testing for effectiveness with respect to the
implementation in these instances. We concluded, as part of our evaluation described in the above paragraphs, that the
implementation of ERP in these circumstances has not materially affected our internal control over financial reporting.
3M COMPANY
FORM 10-Q
For the Quarterly Period Ended September 30, 2014
PART II. Other Information
Item 1. Legal Proceedings.
Discussion of legal matters is incorporated by reference from Part I, Item 1, Note 11, "Commitments and Contingencies" of
this document, and should be considered an integral part of Part II, Item 1, "Legal Proceedings."
Item 1A. Risk Factors.
Provided below is a cautionary discussion of what we believe to be the most important risk factors applicable to the
Company. Discussion of these factors is incorporated by reference into and considered an integral part of Part I, Item 2,
"Management's Discussion and Analysis of Financial Conditions and Results of Operations."
* Results are impacted by the effects of, and changes in, worldwide economic and capital markets conditions. The Company
operates in more than 70 countries and derives approximately two-thirds of its revenues from outside the United States. The
Company's business is subject to global competition and may be adversely affected by factors in the United States and other
countries that are beyond its control, such as disruptions in financial markets, economic downturns in the form of either
contained or widespread recessionary conditions, elevated unemployment levels, sluggish or uneven recovery, in specific
countries or regions, or in the various industries in which the Company operates; social, political or labor conditions in
specific countries or regions; natural and other disasters affecting the operations of the Company or its customers and
suppliers; or adverse changes in the availability and cost of capital, interest rates, tax rates, or regulations in the
jurisdictions in which the Company operates.
* The Company's credit ratings are important to 3M's cost of capital. The major rating agencies routinely evaluate the
Company's credit profile and assign debt ratings to 3M. The Company currently has an AA- credit rating, with a stable
outlook, from Standard & Poor's and an Aa2 credit rating, with a negative outlook, from Moody's Investors Service. This
evaluation is based on a number of factors, which include financial strength, business and financial risk, as well as
transparency with rating agencies and timeliness of financial reporting. The Company's current ratings have served to lower
3M's borrowing costs and facilitate access to a variety of lenders. 3M's ongoing transition to a more optimized capital
structure, financed with additional low-cost debt, could impact 3M's credit rating in the future. Failure to maintain
strong investment grade ratings would adversely affect the Company's cost of funds and could adversely affect liquidity and
access to capital markets.
* The Company's results are affected by competitive conditions and customer preferences. Demand for the Company's products,
which impacts revenue and profit margins, is affected by (i) the development and timing of the introduction of competitive
products; (ii) the Company's response to downward pricing to stay competitive; (iii) changes in customer order patterns,
such as changes in the levels of inventory maintained by customers and the timing of customer purchases which may be
affected by announced price changes, changes in the Company's incentive programs, or the customer's ability to achieve
incentive goals; and (iv) changes in customers' preferences for our products, including the success of products offered by
our competitors, and changes in customer designs for their products that can affect the demand for some of the Company's
products.
* Foreign currency exchange rates and fluctuations in those rates may affect the Company's ability to realize projected
growth rates in its sales and earnings. Because the Company's financial statements are denominated in U.S. dollars and
approximately two-thirds of the Company's revenues are derived from outside the United States, the Company's results of
operations and its ability to realize projected growth rates in sales and earnings could be adversely affected if the U.S.
dollar strengthens significantly against foreign currencies.
* The Company's growth objectives are largely dependent on the timing and market acceptance of its new product offerings,
including its ability to continually renew its pipeline of new products and to bring those products to market. This ability
may be adversely affected by difficulties or delays in product development, such as the inability to identify viable new
products, obtain adequate intellectual property protection, or gain market acceptance of new products. There are no
guarantees that new products will prove to be commercially successful.
* The Company's future results are subject to fluctuations in the costs and availability of purchased components,
compounds, raw materials and energy, including oil and natural gas and their derivatives, due to shortages, increased
demand, supply interruptions, currency exchange risks, natural disasters and other factors. The Company depends on various
components, compounds, raw materials, and energy (including oil and natural gas and their derivatives) supplied by others
for the manufacturing of its products. It is possible that any of its supplier relationships could be interrupted due to
natural and other disasters and other events, or be terminated in the future. Any sustained interruption in the Company's
receipt of adequate supplies could have a material adverse effect on the Company. In addition, while the Company has a
process to minimize volatility in component and material pricing, no assurance can be given that the Company will be able
to successfully manage price fluctuations or that future price fluctuations or shortages will not have a material adverse
effect on the Company.
* Acquisitions, strategic alliances, divestitures, and other unusual events resulting from portfolio management actions and
other evolving business strategies, and possible organizational restructuring could affect future results. The Company
monitors its business portfolio and organizational structure and has made and may continue to make acquisitions, strategic
alliances, divestitures and changes to its organizational structure. With respect to acquisitions, future results will be
affected by the Company's ability to integrate acquired businesses quickly and obtain the anticipated synergies.
* The Company's future results may be affected if the Company generates fewer productivity improvements than estimated. The
Company utilizes various tools, such as Lean Six Sigma, to improve operational efficiency and productivity. There can be no
assurance that all of the projected productivity improvements will be realized.
* The Company employs information technology systems to support its business, including ongoing phased implementation of an
enterprise resource planning (ERP) system on a worldwide basis over the next several years. Security breaches and other
disruptions to the Company's information technology infrastructure could interfere with the Company's operations,
compromise information belonging to the Company and its customers and suppliers, and expose the Company to liability which
could adversely impact the Company's business and reputation. In the ordinary course of business, the Company relies on
information technology networks and systems, some of which are managed by third parties, to process, transmit and store
electronic information, and to manage or support a variety of business processes and activities. Additionally, the Company
collects and stores certain data, including proprietary business information, and may have access to confidential or
personal information in certain of our businesses that is subject to privacy and security laws, regulations and
customer-imposed controls. Despite our cybersecurity measures (including employee and third-party training, monitoring of
networks and systems, and maintenance of backup and protective systems) which are continuously reviewed and upgraded, the
Company's information technology networks and infrastructure may still be vulnerable to damage, disruptions or shutdowns
due to attack by hackers or breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or
utility failures, systems failures, natural disasters or other catastrophic events. While we have experienced, and expect
to continue to experience, these types of threats to the Company's information technology networks and infrastructure, none
of them to date has had a material impact to the Company. There may be other challenges and risks as the Company upgrades
and standardizes its ERP system on a worldwide basis. Any such events could result in legal claims or proceedings,
liability or penalties under privacy laws, disruption in operations, and damage to the Company's reputation, which could
adversely affect the Company's business.
* The Company's future results may be affected by various legal and regulatory proceedings and legal compliance risks,
including those involving product liability, antitrust, environmental, the U.S. Foreign Corrupt Practices Act and other
anti-bribery, anti-corruption, or other matters. The outcome of these legal proceedings may differ from the Company's
expectations because the outcomes of litigation, including regulatory matters, are often difficult to reliably predict.
Various factors or developments can lead the Company to change current estimates of liabilities and related insurance
receivables where applicable, or make such estimates for matters previously not susceptible of reasonable estimates, such
as a significant judicial ruling or judgment, a significant settlement, significant regulatory developments or changes in
applicable law. A future adverse ruling, settlement or unfavorable development could result in future charges that could
have a material adverse effect on the Company's results of operations or cash flows in any particular period. For a more
detailed discussion of the legal proceedings involving the Company and the associated accounting estimates, see the
discussion in Note 11 "Commitments and Contingencies" within the Notes to Consolidated Financial Statements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
Repurchases of 3M common stock are made to support the Company's stock-based employee compensation plans and for other
corporate purposes. In February 2013, 3M's Board of Directors authorized the repurchase of up to $7.5 billion of 3M's
outstanding common stock, with no pre-established end date. In February 2014, 3M's Board of Directors replaced the
Company's February 2013 repurchase program with a new repurchase program. This new program authorizes the repurchase of up
to $12 billion of 3M's outstanding common stock, with no pre-established end date.
Issuer Purchases of Equity
Securities (registered pursuant to
Section 12 of the Exchange Act)
Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (Millions)
January 1-31, 2014 2,152,171 $ 134.07 2,148,754 $ 2,229
February 1-28, 2014 5,058,426 $ 130.79 5,058,426 $ 11,338
March 1-31, 2014 5,789,597 $ 132.90 5,786,921 $ 10,569
Total January 1-March 31, 2014 13,000,194 $ 132.27 12,994,101 $ 10,569
April 1-30, 2014 4,615,353 $ 135.93 4,607,663 $ 9,943
May 1-31, 2014 2,619,394 $ 141.05 2,613,100 $ 9,574
June 1-30, 2014 2,674,367 $ 143.80 2,674,367 $ 9,190
Total April 1-June 30, 2014 9,909,114 $ 139.41 9,895,130 $ 9,190
July 1-31, 2014 2,969,148 $ 144.54 2,963,047 $ 8,762
August 1-31, 2014 3,783,000 $ 141.90 3,783,000 $ 8,225
September 1-30, 2014 2,209,057 $ 143.58 2,209,057 $ 7,908
Total July 1-September 30, 2014 8,961,205 $ 143.19 8,955,104 $ 7,908
Total January 1-September 30, 2014 31,870,513 $ 137.56 31,844,335 $ 7,908
(1) The total number of shares purchased includes: (i) shares purchased under the Board's authorizations described above, and (ii) shares purchased in connection with the exercise of stock
options.
(2) The total number of shares purchased as part of publicly announced plans or programs includes shares purchased under the Board's authorizations described above.
Item 3. Defaults Upon Senior Securities. - No matters require disclosure.
Item 4. Mine Safety Disclosures. Pursuant to Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(the "Act"), the Company is required to disclose, in connection with the mines it operates, information concerning mine
safety violations or other regulatory matters in its periodic reports filed with the SEC. The information concerning mine
safety violations or other regulatory matters required by Section 1503(a) of the Act is included in Exhibit 95 to this
quarterly report.
Item 5. Other Information. - No matters require disclosure.
Item 6. Exhibits.
Exhibits. These exhibits are either incorporated by reference into this report or filed herewith with this report. Exhibit
numbers 10.1 through 10.39 are management contracts or compensatory plans or arrangements.
Index to Exhibits:
(3) Articles of Incorporation and bylaws
(3.1) Certificate of incorporation, as amended as of May 11, 2007, is incorporated by reference from our Form 8-K dated May 14, 2007.
(3.2) Bylaws, as amended as of February 10, 2009, are incorporated by reference from our Form 8-K dated February 12, 2009.
(4) Instruments defining the rights of security holders, including indentures:
(4.1) Indenture, dated as of November 17, 2000, between 3M and The Bank of New York Mellon Trust Company, N.A., as successor trustee, with respect to 3M's senior debt securities, is incorporated by reference from our Form 8-K dated December 7, 2000.
(4.2) First Supplemental Indenture, dated as of July 29, 2011, to Indenture dated as of November 17, 2000, between 3M and The Bank of New York Mellon Trust Company, N.A., as successor trustee, with respect to 3M's senior debt securities, is incorporated by reference from our Form 10-Q for the quarter ended June 30, 2011.
(10) Material contracts and management compensation plans and arrangements:
(10.1) 3M 2008 Long-Term Incentive Plan (including amendments through February 2012) is incorporated by reference from our Proxy Statement for the 2012 Annual Meeting of Stockholders.
(10.2) (10.3) Amendment of the 3M 2008 Long-Term Incentive Plan is incorporated by reference from our Form 10-K for the year ended December 31, 2013.Form of Agreement for Stock Option Grants to Executive Officers under 3M 2008 Long-Term Incentive Plan is incorporated by reference from our Form 8-K dated May 13, 2008.
(10.4) Form of Stock Option Agreement for options granted to Executive Officers under the 3M 2008 Long-Term Incentive Plan, commencing February 9, 2010, is incorporated by reference from our Form 10-K for the year ended December 31, 2009.
(10.5) Form of Restricted Stock Unit Agreement for restricted stock units granted to Executive Officers under the 3M Long-Term Incentive Plan, effective February 9, 2010, is incorporated by reference from our Form 10-K for the year ended December 31, 2009.
(10.6) Form of 3M 2010 Performance Share Award under the 3M 2008 Long-Term Incentive Plan is incorporated by reference from our Form 8-K dated March 4, 2010.
(10.7) Form of Stock Option Agreement for U.S. Employees under 3M 2008 Long-Term Incentive Plan is incorporated by reference from our Form 10-K for the year ended December 31, 2008.
(10.8) Form of Restricted Stock Unit Agreement for U.S. Employees under 3M 2008 Long-Term Incentive Plan is incorporated by reference from our Form 10-K for the year ended December 31, 2008.
(10.9) Amendment of the 3M 2005 Management Stock Ownership Program and the 3M 2008 Long-term Incentive Plan - transfer of stock options to former spouses, is incorporated by reference from our Form 10-K for the year ended December 31, 2010.
(10.10) 3M 2005 Management Stock Ownership Program is incorporated by reference from our Proxy Statement for the 2005 Annual Meeting of Stockholders.
(10.11) 3M 2002 Management Stock Ownership Program is incorporated by reference from our Proxy Statement for the 2002 Annual Meeting of Stockholders.
(10.12) Amendments of 3M 2002 and 2005 Management Stock Ownership Programs are incorporated by reference from our Form 8-K dated November 14, 2008.
(10.13) Form of award agreement for non-qualified stock options granted under the 2005 Management Stock Ownership Program, is incorporated by reference from our Form 8-K dated May 16, 2005.
(10.14) Form of award agreement for non-qualified stock options granted under the 2002 Management Stock Ownership Program, is incorporated by reference from our Form 10-K for the year ended December 31, 2004.
(10.15) 3M 1997 General Employees' Stock Purchase Plan, as amended through November 8, 2004, is incorporated by reference from our Form 10-K for the year ended December 31, 2004.
- More to follow, for following part double click ID:nRSC9102ViRecent news on 3M Co
See all newsREG - Stock Exch Notice - Admission to ISM - 30/11/2023
AnnouncementRCS - 3M Company - StageZero Announces COC Protocol in Europe
AnnouncementREG - Official List - Removal: 3M Company
AnnouncementREG - Stock Exch Notice - Cancellation - 3M Company
AnnouncementREG - 3M Company - 3rd Quarter Results
Announcement